Last week Etsy released a video/online labs entitled: The Art of Pricing for Profit hosted my Megan Auman and Tara Gentile (of Designing and MBA and Scoutie Girl respectively). If you don’t know who these very talented women are already, you should really click on their names and do a little research. If you’re in this business of craft you should already have them bookmarked and dog-eared, or whatever we do in this day and age of technology.
Anyway- I wanted to write up a little ‘report’ of sorts of what I learned from watching the video and listening to the questions, and then applying it to my own business. (You can also download the worksheet here.) Let’s keep it short and sweet though, since I’m about a week late posting it in the first place. (all information and quotes taken from their presentation)
- “Businesses (that’s what WE ARE) exist to make a profit and are entitled to do so.”I think that we often forget that we are indeed a business. What we do counts, and the first step to making a profit is truly realizing and accepting that yes, our art IS our business.
- “About 88.2% of all sellers in online marketplaces (artists) need to double their prices.”(That percentage is SO high! In my opinion this is because many (including myself) artists started out pricing items on what THEY needed to make, not thinking about the possibility of later selling their items wholesale and having to only take half (HALF!) of their original retail cost. Thinking ahead is hard, but a necessary step!)
- “You ARE NOT A SWEATSHOP!”
- Equations to live by:
Profit + materials + labor + overhead = perceived value
- “Profit does NOT equal Labor.”
(This was super important to realize/learn. I’ve never taken into account profit outside of labor. Why is it important? Because, if you ever want to grow or expand your business and hire employees or interns, you need to be able to pay THEM. And if you’re only collecting labor on your products, then in the end YOU aren’t making any money of what THEY might make. Make sense? Overhead has the same idea/intention. Sure, I work from home now, but what if someday I want to have an outside studio, shop, etc – well, if I don’t include overhead in my prices now I’ll never be able to afford to move up and out of this house. Make sense?
So, that’s what I learned. I learned mostly that it’s really important to actualize yourself as a business, accept that YOU ARE NOT YOUR CUSTOMER, and be comfortable with your prices and your potential clients will as well.
I think it’s hard for some of us to raise our prices to what we know they should be because of a mixture of self worth and economic hardship. But the honest to goodness truth is this:
We are one of a kind makers of art and craft; we are not sweatshop workers creating mass-produced items that every Tom, Dick, and Harry can get at the local Wal-Mart; we are important, one of a kind, creators that have a right to make a living doing what we Love.
What do you think about pricing for profit? As a buyer would you pay more for an item created by an artist as opposed to a factory? As an artist, can you accept that you likely need to charge more for your life’s work? What’s keeping you from doing it? Or, are you already? Share!